Understanding Franchises

What is a franchise?

• A franchise is a business model that allows individuals to operate a business under the branding of an established company.

• A franchise is a loan provided to new entrepreneurs.

• A franchise is a government program for small businesses.

• A franchise is a type of investment that guarantees high returns.

Who is a franchisor?

• A franchisor is an employee who manages a franchise location.

• A franchisor is a business that only sells products without a brand.

• A franchisor is the owner of a franchise who allows others to operate a business under its brand.

• A franchisor is a person who buys a franchise from the owner.

What is a franchise fee?

• A franchise fee is a tax imposed by the government on franchises.

• A franchise fee is a monthly royalty paid to the franchisor.

• A franchise fee is a payment made by the franchisor to the franchisee for marketing.

• A franchise fee is an initial payment made to a franchisor for the rights to operate a franchise.

Which is an example of a franchise?

• Subway

• McDonald's

• Starbucks

• Burger King

What is a royalty fee?

• A royalty fee is a payment for the use of intellectual property.

• A royalty fee is a one-time payment for a product.

• A royalty fee is a charge for advertising services.

• A royalty fee is a tax on profits.

What does FDD stand for?

• Feature-Driven Design

• Feature-Driven Development

• Functionality-Driven Development

• Fast Data Delivery

What is a key benefit of a franchise?

• Limited marketing opportunities

• Access to an established brand and proven business model.

• Complete control over business operations

• High startup costs and no support

What is territorial protection in franchising?

• Territorial protection in franchising is the exclusive right of a franchisee to operate within a defined geographic area.

• The ability for franchisors to open new locations in the same area as franchisees.

• The right to operate multiple franchises in different countries.

• A requirement for franchisees to pay higher fees for exclusive rights.

What is the typical duration of a franchise agreement?

• 5 to 20 years

• 3 to 5 years

• 1 to 3 years

• 20 to 30 years

What is the role of a franchisee?

• The franchisee must develop their own business model.

• A franchisee is responsible for creating a new brand.

• The role of a franchisee is to operate a business using the franchisor's brand and system.

• A franchisee only sells products without any operational responsibilities.